International Paper to buy smaller rival Temple-Inland

The transaction will give the combined company about 40 percent of the corrugated packaging materials market in North America.

IP is the largest producer of corrugated packaging in North America, while Temple-Inland is the third-largest.

International Paper raised its bid to $32 per share for Temple-Inland, a 30 percent premium to its Friday closing price. That is higher than its previous bid of $30.60 per share in June, which its Austin, Texas, target had rejected as too low.

International Paper, which is based in Memphis, Tenn., will also assume $600 million in debt.

The company is one of Augusta’s largest employers, with more than 700 employees producing paper board.

The proposed deal has been approved by the boards of both companies. If shareholders and regulators approve, the transaction is expected to close in 2012’s first quarter.

International Paper said Tuesday that the proposed buyout would likely add to its earnings the first year after the deal’s completion. The transaction is also expected to save about $300 million a year within 24 months of closing.

Those savings are expected to come mostly from operations, freight, logistics, selling expense and overhead.

Temple-Inland stockholders will vote on the proposal during a special meeting. The company did not disclose if a date has been set for the meeting yet.